Mexican Tycoon Carlos Slim Poised To Take Advantage Of Mexico's Announced Oil Reform

Tabasco Oil Company, owned by Mexican tycoon Carlos Slim, reported finding oil in Colombia and announced that it will soon begin testing to confirm the production level of the well. In making the announcement to the Mexican Stock Market on July 3, Grupo Carso SAB, Slim’s holding company, said that the exploration work was part of the project known as Jagüeyes 3432-B, located in an area called Los Llanos Orientales in Colombia’s northeast.

Observers believe that Slim’s increasing involvement in the energy sector gives him an advantage in the eventuality that Mexico’s controversial plan for energy reform moves forward later this year. Mexican President Enrique Peña Nieto announced last month in London that he will ask the Mexican Congress for constitutional changes to allow private capital investment in Petroleos Mexicanos (Pemex), Mexico’s state-owned oil and gas monopoly.

“There is no doubt that Slim will be one of the most important private players in the potential opening of Mexico’s energy sector. Carso already has the framework to do business in Mexico’s oil sector in a substantial way,” said Samuel García, senior financial journalist and Editor of Arena Pública, an Internet business publication. García pointed out that Servicios Integrales GSM, Swecomex, and Infraestructura y Construcción, are companies owned or controlled by Slim that already supply drilling and oil-platform services to Pemex, the world's second largest non-publicly listed company by total market value and 7th by reserves and production.

In February, Grupo Carso, which also owns retail stores and industrial manufacturers in Mexico, bought a 70 % stake in Geoprocesados SA’s Tabasco Oil Co. This gave Slim, the world’s second richest man, access to the Colombian oil industry. At the time of the acquisition, Tabasco Oil Company had a contract to explore and produce oil in a field in Llanos Orientales, known as LLA 56. Other companies, including Ecopetrol S.A., which is Colombia’s state-owned oil company, and France’s Perenco S.A., have already produced crude in Los Llanos. In a recent interview, Slim told Bloomberg that he is seeking to boost oil investments in Colombia because of the country’s open policies on exploration. Ecopetrol plans to double output by 2020.

The National Hydrocarbons Agency, an agency affiliated with the Colombian government, reported that in 2012, before Carso’s stake purchase, Tabasco Oil Company won rights in a state-run auction by pledging to invest $5.8 million in exploration at the site near the Venezuelan border and to cede ownership of 1 % of eventual production to the Colombian government. Aside from his investment in Tabasco Oil in Colombia, last year Slim bought a 8.4 % stake in Yacimientos Petrolíferos Fiscales, becoming the fourth- largest stakeholder in Argentina’s oil company. Geoprocesados, a services company based in Tabasco dedicated to the exploration and production of oil and gas, has offices in Buenos Aires, Bogota and Santa Cruz, as well as Houston. Slim has also invested in American oil-services companies such as Bronco Drilling Co. and Allis-Chalmers Energy Inc.